AirAsia Group denies allegations of aviation corruption by India police

KUALA LUMPUR: AirAsia Group Bhd has strongly refuted all allegations made in a first information report by the police in India, including any impropriety in obtaining government approvals.

The group said it would pursue all legal remedies to address the allegations against AirAsia Bhd, AirAsia India Pte Ltd, AirAsia Group CEO Tony Fernandes and his Deputy Bo Lingam, which it described as “baseless, unsupported and unjustified.”

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Media reports in India have widely reported that the Central Bureau of Investigation (CBI) had registered a a first information report against the parties named above based on information from an unnamed “reliable source”.

“We question the motives of the unnamed person, persons or organisation that lodged this FIR, but we will co-operate fully with the Indian authorities in accordance with due process provided in law,” AirAsia Group said in a statement on Tuesday (Jun 19).

Among the allegations is that unnamed public servants had engaged in a criminal conspiracy involving AirAsia Bhd, AirAsia India, Fernandes, Lingam, and four other named parties and unknown private persons to expedite the approval process and change in aviation policies to suit AirAsia India.

This was by lobbying stakeholders in the Indian government through non-transparent means.

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The group said all required approvals were secured through normal channels and it took more than a year to get them.

AirAsia Group said it entered into a joint venture with Tata Sons Ltd to set up a low-cost carrier in India mainly due to the latter’s “sterling reputation and integrity”.

AirAsia Investments Ltd holds 49 per cent equity interest in AirAsia India while the controlling shareholding of 51 per cent is held by Indian entities, namely Tata Sons Ltd (49 per cent) and two individuals on the board (2 per cent) who are Indian nationals.

“Given Tata’s more-than-100-year track record and that of AirAsia’s reputation, we refute any inference of impropriety in obtaining these approvals,” the group said.

AirAsia India, as with others in the aviation industry, had lobbied the Indian government to remove the 5/20 rule – the requirement that domestic carriers must have five years of operational experience and at least 20 aircraft in order to fly overseas.

AirAsia Group Bhd said this was done in compliance with the law, without any unlawful payments.

Further, the group added, it had done an internal review and concluded that there had been no wrongdoing by either Fernandes or Lingam.

On the allegation that sham contracts were entered into with Travel and Total Food Services, HNR Trading Pte Ltd and DTA Consulting to bribe unknown public servants, the group said apart from the contract with HNR Trading, the contracts referred to in the first information report were entered in the ordinary course of business for services rendered on normal commercial terms.

On the deal with HNR Trading, it said AirAsia India lodged an first information report last year against its then-CEO, Mittu Chandiliya, over the “unauthorised” contract, as at the relevant time, all contracts signed by the carrier were under his watch.

The group said AirAsia India had also submitted a forensic audit report by a leading accounting firm in India to show that funds were illegally siphoned out of the company through that unauthorised contract and believed that the Bangalore police were still investigating although much time had lapsed.

Another allegation in the first information report is that AirAsia India is indirectly controlled and operated by AirAsia Bhd via the brand licensing agreement between the parties, thus violating the Foreign Investment Promotion Board norms that require substantial ownership and effective control to be in the hands of Indian nationals.

Air Asia Group Bhd said this had been refuted by the Director General (DG) of India’s Directorate General of Civil Aviation.

In a report dated Feb 8, 2017, filed in the Delhi High Court, the Director General stated he did not find that the terms and conditions laid down in the brand licensing agreement “dilute the substantial ownership and effective control of AirAsia India being vested with Indian nationals.”